Dendreon Posts 4th-Quarter Profit on Royalty Stream Sale, Provenge

Dendreon posted a fourth-quarter profit on the sale of its royalty stream for a Merck hepatitis C drug, while Dendreon’s cancer drug Provenge generated higher sales.

The Seattle-based company, however, said sales growth for Provenge would moderate for the first quarter. (Here’s the company’s earnings release.)

Dendreon shares were down $2.75, or 18.5%, to $12.11 in early afternoon trading.

Dendreon said it was making progress helping physician practices receive insurance reimbursement for the expensive Provenge. Reimbursement challenges had hampered Provenge’s financial performance following its introduction in 2010.

“While it’s not easy to introduce an entirely new treatment paradigm for an entirely new market, we have made important progress towards establishing Provenge as a foundation of care,” John Johnson, who last month took over Dendreon as chief executive, said on a conference call with analysts.

Dendreon’s product revenue for the fourth quarter was $77 million, up from $25 million a year earlier. The company’s sole product on the market is Provenge, a drug designed to harness the body’s immune system to fight prostate cancer. (Provenge was approved by the FDA in 2010.)

Dendreon said Provenge revenue was higher than expected for December because some customers accelerated orders.

But Dendreon expects first-quarter Provenge sales growth should be in the low single digits, based partly on fewer new patient enrollments.

Total fourth-quarter revenue was $202.1 million, boosted by a $125 million payment for Dendreon’s sale of its royalty interest in Merck’s Victrelis hepatitis C treatment to CPPIB Credit Investments Inc. Dendreon had acquired intellectual property related to the drug several years ago.

The royalty helped Dendreon post a fourth-quarter profit of $38.1 million, or 26 cents a share, reversing a year-earlier loss of $91.8 million, or 64 cents a share.

Stripping out certain expenses such as depreciation and amortization, Dendreon said it earned 45 cents a share for the latest quarter.

On the conference call, Johnson reiterated his plan to expand sales of Provenge, reduce manufacturing costs and advance the company’s pipeline of experimental drugs.